Mitchell Charlesworth is warning employers to prepare for rocketing salary costs from next month when payrolls shoot up as the new National Living Wage comes into force.
Businesses will have to be braced for a 7.5pc increase in salary costs from 1 April, 2016, as UK workers aged over 25 years who are currently earning the minimum rate of £6.70 an hour will receive a 50p increase. The threshold will be increased each year with the aim of reaching 60pc of median pay across the UK by 2020, when it could be as high as £9.35 an hour.
More than one million people will directly benefit from the rise to £7.20 per hour and see their pay packets rise by up to £900 per year. This rise is part of the government’s vision of a higher wage, lower welfare and lower tax society, but critics warn 900,000 jobs could be lost in the retail sector.
However, it is imperative for businesses to pay their workers the correct wage from 1April as HMRC will be responsible for enforcing this new National Living Wage and it can publicly name and shame employers. A report by the British Retail Consortium claims the National Living Wage, to be phased in over four years, will add £3bn to annual wage bills alone, while the costs of a new levy to fund apprenticeships will be around £400m a year.
Mitchell Charlesworth has offices in Manchester, Liverpool, Warrington, Widnes and Chester.
Ken Davies, Mitchell Charlesworth Director of Payroll, said: “Opinions vary widely on the new National Minimum Wage ranging from it being criticised as a “tax on business” to being hailed as helping to make a more equal society. Either way, this crucial change in workers’ wages will have far reaching effects not just on employee pay packets and employer profits, but also on the wider UK economy.
“To navigate this minefield and ensure businesses do not accidentally fall foul of this critical new legislation, we have a skilled accountancy team who can complete a workforce review to see which employees are eligible for the pay rise.
“Our payroll team consists of experienced advisors who can help businesses through these changes, whether they have an internal payroll team or not. We can support a firm’s own payroll team to take the appropriate action where required to ensure that it complies with the new minimum wage legal framework.
“It is important to inform workers of their new pay rate and we can help produce communications to get this vital message across. Mitchell Charlesworth can also check that staff aged under 25 years are earning at least the right rate of National Minimum Wage.”
Workers under 25 should receive rates of pay as follows:
- £6.70: for 21s and over
- £5.30: for 18 to 20 year olds
- £3.87: for under 18s
- £3.30: for apprenticeships (year 1 or 16-18 year olds in any year of apprenticeship)
National Minimum Wage (NMR) rates will be amended in April each year to coincide with the uprating of the national living wage, starting from April 2017. The NMR rates for workers aged up to 24 and for apprentices will increase from October 2016 in line with the recommendations of the Low Pay Commission.
Anyone wishing to discuss the updating of their payroll or would like to arrange an appointment about outsourcing a payroll can contact Mitchell Charlesworth payroll experts Ken Davies or Joanne Nieman, on tel: 0151 423 7500, or email: enquiries@mitchellcharlesworth.co.uk
Notes to editors
Mitchell Charlesworth
Mitchell Charlesworth was formed more than 125 years ago and has grown into one of the largest independent practices in the North West. Operating with over 150 staff across five offices in Manchester, Liverpool, Widnes, Warrington and Chester, the firm of Chartered Accountants and Business Advisors provides a comprehensive range of services in the areas of financial and taxation advice.
Mitchell Charlesworth excels at working closely with clients to ensure they maximise their full potential by using their experienced partners and staff, as well as their extensive contact base in the financial markets, to achieve the best results. Whether looking at business improvements, extending trade alternatives or ensuring the best deal is obtained in a business acquisition or disposal, the services are led by partners with years of experience supported by a qualified and enthusiastic staffing team delivering:
- Statutory audit
- Accountancy
- Corporate and personal taxation
- Company acquisitions and disposals
- Corporate recovery and insolvency
- Management buyouts
- Due diligence
- VAT
- Tax planning
- Pensions and investment advice
- Payroll
Mitchell Charlesworth is the trading name of Mitchell Charlesworth LLP, registered in England and Wales number OC391811. A list of members is available for inspection at our offices.
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